Suntory Needs To Optimize Japan And Expand Its Growth Opportunities

In contrast to Kirin (OTCPK:KNBWY), which I wrote about the other day, Suntory Beverage & Food (OTCPK:STBFY) ("Suntory") has a more promising record of managing its non-alcoholic beverage businesses and realizing value from its foreign investments. Nevertheless, while Japan's sluggish beer market isn't a concern here (Suntory Beverage & Food is a subsidiary of Suntory Holdings and doesn't participate in alcoholic beverages), Japan's non-alcoholic beverage market isn't offering much growth potential either, and Suntory will need to maximize its profitability here while exploring better growth opportunities outside Japan.

I believe management will succeed in these efforts, but there are ample risks and uncertainties regarding timing and magnitude. Suntory is already investing to develop market opportunities in Africa, but the company hasn't yet done much with China, India, or Latin America. While I'm looking for the company to generate low single-digit growth due to its heavy reliance on developed markets like Japan, Australia, and Western Europe, that is still sufficient to support a fair value about 10% above today's price.

Follow this link for more:
Suntory Needs To Optimize Japan And Expand Its Growth Opportunities

Kirin's Self-Improvement Amply Rewarded

Up more than a third over the past year (and around 30% over the past two years), Kirin (OTCPK:KNBWY) has outperformed peers like Asahi (OTC:ASBRY), Sapporo (OTC:SOOBF), and Suntory (OTCPK:STBFY) as management has made several moves to improve several underperforming segments of the business, including the sale of the long-struggling Brazilian operation to Heineken (OTCQX:HEINY). Now the question is what Kirin management can do to stimulate growth when its core market(s) offer minimal underlying growth at best and acquisition prices are steep.

Kirin shares deserved their run, but management needs to prove that it can deliver more than low single-digit FCF growth in the future. Although the underlying growth assumptions are not very high here, and the shares are undervalued on the basis of established industry M&A premiums, Kirin's best growth opportunities hinge upon the company executing well in precisely those places where it has struggled, and that's a little too aggressive for my comfort today.

Read more here:
Kirin's Self-Improvement Amply Rewarded

Coca-Cola FEMSA Offers Interesting Value Today And Upside Down The Line

I've made no secret over the years that Fomento Economico Mexicano, S.A.B. De C.V. (FEMSA) (NYSE:FMX) is one of my favorite emerging market companies, as I believe the company has a solid cash-generating business in Coca-Cola FEMSA (NYSE:KOF), exciting growth opportunities on the retail side with its OXXO stores and growing pharmacy business, and significant options with the 20% stake it holds in Heineken (OTCQX:HEINY).

I'm looking at Coca-Cola FEMSA in a little more depth today, though, because I think the valuation here is pretty interesting, there are good growth opportunities on the horizon, and investors may be more comfortable with an emerging markets business anchored by demand for Coca-Cola (NYSE:KO) products rather than a more speculative retailing-based growth story. I believe Coca-Cola FEMSA is priced to generate low-to-mid double-digit total annual returns at today's price, with potential earnings upside tied to economic recoveries in major markets, improved performance in Brazil, and expansion into other bottling markets.

Read the full article here:
Coca-Cola FEMSA Offers Interesting Value Today And Upside Down The Line

Seeking Alpha: M&A Could Add Even More Pop To SABMiller

Given the importance of scale and exposure to emerging market growth for global consumer businesses, it seems like a "when, not if" type of question regarding SABMiller's (OTCPK:SBMRY) future involvement in M&A. The key question, though, is whether SABMiller continues to play the role of acquirer and consolidator, or whether the company (likely grudgingly) finds itself scooped up.

Arguably SABMiller doesn't need to concern itself overly much with M&A. The company generates 70% of its profits from emerging markets, the highest such percentage among the major brewers, and is weighed to the lowest per-capita consumption markets (meaning that it can expect to benefit from rising incomes/consumption). Not only that, SABMiller is one of the largest Coca-Cola (NYSE:KO) bottlers and stands to benefit from a new JV in Africa as well as further potential expansion.

With M&A likely to factor heavily in the company's future, a stand-alone valuation may be beside the point. That said, mid-single digit revenue growth and further incremental FCF margin potential do support the stock at this level, with M&A potentially adding revenue (if SABMiller buys) or margin synergy (if SABMiller is a seller) to the valuation.

Please continue here:
M&A Could Add Even More Pop To SABMiller

Seeking Alpha: Can Coca-Cola Amatil Bring Back The Fizz?

Bottling is often overstated as a great business. Bottling and selling assorted flavored sugar waters with Coca-Cola (KO) or PepsiCo (PEP) labels can be a license to print money in some cases, but other factors like competition, consumer preferences, and the power of retailers can make a big difference. Investors in Coca-Cola Amatil (OTCPK:CCLAY) have seen just how significant these factors can be, as the shares of what has been regarded as one of the best-run Coca-Cola bottlers are down more than 40% over the past year as a variety of factors have combined to undermine profits.

Read more here:
Can Coca-Cola Amatil Bring Back The Fizz?

Investopedia: Coca-Cola FEMSA Adds More Volume In Brazil

Coca-Cola FEMSA (NYSE:KOF), the second-largest Coca-Cola (NYSE:KO) bottler in the world and owned by both Coca-Cola and FEMSA (NYSE: FMX), continues to show a willingness to invest for future growth and margin leverage. KOF has spent roughly $6 billion over the last two years, including nearly $700 million to expanding into the Philippines. Now KOF has added some significant assets in Brazil with the $1.9 billion acquisition of Spaipa, the second-largest private Coca-Cola bottler in Brazil.

Continue reading here:
http://www.investopedia.com/stock-analysis/090413/cocacola-femsa-adds-more-volume-brazil-kof-fmx-ko-akob.aspx

Investopedia: Even When Coca-Cola Stumbles, It Does Okay

If this is what a bad quarter from Coca-Cola (NYSE:KO) looks like, it's not hard to see why the stock carries a rich multiple. Even in one of the weakest quarters in a long time (from a volume perspective), Coca-Cola did well with its margins. Add in the possibility of improving the company's global operations, particularly in fast-growing markets like China and Indonesia, and the long-term prospects still look pretty good. Alas, the stock still isn't anything close to “cheap” and is unlikely to become so anytime soon.

Read more here:
http://www.investopedia.com/stock-analysis/071613/even-when-cocacola-stumbles-it-does-okay-ko-pep-kof-bud.aspx

Investopedia: Femsa Is A Delicate Balance Between Growth Opportunities And Valuation

As a business, I love Femsa (NYSE:FMX) (also sometimes spelled as FEMSA). This company is not only the co-owner of the second-largest Coca-Cola (NYSE:KO) bottler in the world, but it operates one of largest retail platform in Mexico and is now looking to expand into new retail markets and new geographies. On the other hand, however, excitement over Femsa's stock has got to a pretty fevered level recently before selling off, and while the company's prospects are quite good, the stock is not exactly a cheap option on that growth.

Please read more here:
http://www.investopedia.com/stock-analysis/060513/femsa-delicate-balance-between-growth-opportunities-and-valuation-fmx-ko-kof-mcd-c-yum.aspx

Investopedia: Investors Can't Seem To Get Enough Of Hershey

I have to give credit where it's due – Hershey (NYSE:HSY) is definitely one of the strongest stories in packaged/branded food today. While there are a few relative newcomers showing better volume growth (from a much smaller base), Hershey continues to lead the way when it comes to the large U.S. companies. Better still, Hershey is mixing that growth with strong margin leverage and making a pretty pleasing combo. Although I still think these shares carry a premium valuation, it's hard to argue with a story where management is making so many of the right moves.

Please click below to continue:
http://www.investopedia.com/stock-analysis/042513/investors-cant-seem-get-enough-hershey-hsy-mdlz-nsrgy-pg-ko.aspx

Investopedia: On Track With Volumes And Margins, Coca-Cola Refreshes

As a value-oriented investor, once you relax and accept the fact that stocks like Coca-Cola (NYSE:KO) are almost never going to look cheap, evaluating them becomes quite a bit easier. With stocks like Coca-Cola, the reality is that investors view them as something almost like a hybrid of stock and bond, and so the valuation nearly always seems a bit stretched compared to other equities.

But as this quarter shows, Coca-Cola still has the ability to surprise to the upside. Decent volume growth helped to offset some price pressure and the company's progress on margin should reassure investors that management's long-term growth goals are attainable. So while these shares continue to look expensive by conventional valuation methodologies, and there does seem to be a general state of overvaluation in consumer-oriented stocks, the fundamental case for Coca-Cola remains pretty positive.

Please click the link to continue:
http://www.investopedia.com/stock-analysis/041613/track-volumes-and-margins-cocacola-refreshes-ko-pep-mnst.aspx

Investopedia: ConAgra Now Getting Almost Full Benefit Of The Doubt

It's been an interesting few months for packaged food companies. Volume trends have looked softer than expected as consumers continue to feel a pinch, but input costs have also eased up. Most significant, though, was the acquisition of Heinz (NYSE:HNZ) by Berkshire Hathaway (NYSE:BRK-A,BRK-B) and 3G and the near-immediate upward revaluation of the sector.

Against that backdrop, ConAgra (NYSE:CAG) continues to be a “yes, but...” company. As in, “yes, the RalCorp deal helps, but the company has to execute on the integration” or “yes, input costs are lower, but the company is having to spend on marketing/promotion to prop up weak volume”. While I liked ConAgra as an undervalued play in the sector back in December, I don't feel as strongly about it today given the significant move in the sector and this stock in particular.

Please follow this link to continue:
http://www.investopedia.com/stock-analysis/040313/conagra-now-getting-almost-full-benefit-doubt-cag-gis-mkc-hnz-ko.aspx

Seeking Alpha: FEMSA Just Keeps Rolling

Just about everything seems to be working in favor of FEMSA (FMX) these days. Not only have volumes and margins continued to improve in the Coca-Cola FEMSA (KOF) business, but the company's OXXO stores are lapping the competition in terms of comp-store growth. With new opportunities in Southeast Asia, pharmacies, and financial services, the growth outlook for this Mexican consumer conglomerate looks quite solid.

Please read more here:
FEMSA Just Keeps Rolling

Seeking Alpha: PepsiCo Looks Like A Relative Value In Its Sector

Investors have certainly been willing to pay more for the relatively predictable streams of earnings from packaged food companies recently, and that has left scant value in the sector. That PepsiCo (PEP) still seems to have some value in it is likely a product of the fact that not all analysts are completely sold on the idea that the benefits of the company's recent restructuring will last over the long term. While wasteful acquisitions and unsuccessful marketing initiatives may loom as ongoing threats, these shares do seem to over some relative value in the sector today.

Please read more here:
PepsiCo Looks Like A Relative Value In Its Sector

Seeking Alpha: Does SABMiller Taste Great, Or Is The Valuation Too Filling?

This has been a good year to own companies in the adult beverage trade, as stocks like Anheuser-Busch InBev (BUD), Diageo (DEO), Pernod-Ricard (PDRDY.PK), and Heineken (HINKY.PK) have all outperformed the S&P 500 by a significant margin. The world's second-largest brewer, SABMiller (SBMRY.PK) belongs on that list of outperformers as well, as investors have bid up the shares on improving volume growth and margins. Looking out into 2013, though, the question is whether SABMiller is still poised to be an outperformer.

Please read more here:
Does SABMiller Taste Great, Or Is The Valuation Too Filling?

Seeking Alpha: Taking The Bitter With The Sweet At Senomyx

It's a fact of the investing life that when you swing for the fences, you will occasionally strike out. Thus far, owning shares of "bioflavor" developer Senomyx (SNMX) has been a frustrating and losing experience for most investors. While there is still considerable potential in this very under-followed stock, investors have to accept a biotech-like risk that Senomyx will ultimately be a bitter experience and a total washout as a stock.

Continue reading here:
Taking The Bitter With The Sweet At Senomyx

Seeking Alpha: FEMSA May Just Be Getting Started

Mexico's FEMSA (FMX) has already accomplished quite a lot. Not only is Coca-Cola FEMSA (KOF) the second-largest Coca-Cola bottler in the world and the sole supplier of brands like Coke and Fanta to the world's second-largest soft drinks market (Mexico), but FEMSA also operates OXXO, one of the most profitable and well-run retail operations in Mexico. The stock certainly has reflected this success, with shares up nearly 50% over the past year and nearly 200% over the past five years, but shareholders may have even greater things to look forward to in the coming years.

Read more here:
FEMSA May Just Be Getting Started

Investopedia: Coca-Cola Not So Bubbly, But Does It Matter?

It's just one of the realities of investment writing that nobody's ever going to thank you for writing anything negative about well-loved stocks like Coca-Cola (NYSE:KO), Nike (NYSE:NKE) and PepsiCo (NYSE:PEP). But as these stocks have shown over the past year, valuation always matters; all three remain high-quality companies with incredible brands, but all were expensive a year ago and they have underperformed in the market. Although I see nothing fundamentally disturbing about Coca-Cola from a long-term perspective, I wouldn't be in a rush to pay the going rate for its shares.

Please read more here:
http://www.investopedia.com/stock-analysis/2012/Coca-Cola-Not-So-Bubbly-But-Does-It-Matter-KO-PEP-MNST-NSRGY1016.aspx

Investopedia: Will Margins Take Some Fizz From Coca-Cola?

Although many packaged food companies have struggled to maintain their volumes while passing through higher input prices, Coca-Cola (NYSE:KO) isn't like most companies. Although ongoing margin compression merits some attention, it's hard to imagine that long-term holders are going to get too worked up about it. Coca-Cola remains what it has long been - a top-quality company with a price to match.

Please click here for more:
http://stocks.investopedia.com/stock-analysis/2012/Will-Margins-Take-Some-Fizz-From-Coca-Cola-KO-PEP-DPS-COT0718.aspx

Seeking Alpha: Kraft Looks Like The Tastiest Morsel In Packaged Food

For reasons that don't make a lot of sense to me, investors continue to reward a host of under-performing food companies with pretty robust multiples. I understand the value of a good brand, and I don't fault investors for hanging on to Coca-Cola (KO) or PepsiCo (PEP) even though neither are cheap, but I wonder why so many investors are happy to pay premiums to hold companies experiencing uncontrollable cost inflation and increasing elasticity from consumers.

Please read the full piece here:
Kraft Looks Like The Tastiest Morsel In Packaged Food

Seeking Alpha: PepsiCo Okay On Volumes, But When's The Leverage Coming Back?

These are trying times for food and beverage companies, as managements try to find the right balance between offsetting cost inflation through price increases and maintaining stable volumes. While volumes were a little challenged at PepsiCo (PEP) this quarter, that's not the major challenge in front of the company. The real key to the stock breaking out of a five-year funk may have less to do with matching Coca-Cola (KO) or extending its lead over Kraft (KFT) as it does improving upon margins and free cash flow.

Continue reading here:
PepsiCo Okay On Volumes, But When's The Leverage Coming Back?